Nonprofit Newswire | October 15, 2009

Community clinics have key role in health reformOct 14, 2009; Associate Press| For 20 million low income people, federally qualified community health centers are the primary care provider but waiting lists at many community health centers across the country are growing significantly as 27 states have cut their health care budgets and unemployment rates remain high. In some places waiting lists include literally hundreds of families. The National Association of Community Health Centers says that visits by uninsured families are up 21% in 2009 over 2008, an increase that has been covered in small part by a one-time infusion of stimulus funds but a good portion of those funds were slated for capital improvements. This AP report notes that delays in primary treatment will, of course, cause more chronic and acute disease just as we head into flu season.—Ruth McCambridge

As L3Cs form, lack of clear criteria leaves room for confusion [subscription required $]Oct 11, 2009;Crain’s Detroit Business | The comments of Rob Collier, the CEO of the Council of Michigan Foundations, and others on L3Cs were both surprising and revealing. Collier, one of the really good guys in philanthropy, is a proponent of low profit limited liability corporations (L3Cs), for-profit entities whose social missions rank higher than their profit objectives. Foundations are attracted to L3Cs because, in theory, foundations could make loans to them (program related investments or PRIs) much like they do to 501(c)(3) public charities. Michigan is one of the handful of states that has created a process for registering L3Cs, although it isn’t entirely clear that the IRS would automatically give them nonprofit-like status for PRIs (the originator of L3Cs, Robert Lang of the Mannweiler Foundation in Cross River, New York, has compiled a number of IRS references to suggest that the IRS could and perhaps would okay PRIs to L3Cs). Collier astutely notes that one problem with the Michigan legislation and perhaps L3Cs in general is a lack of definition as to what constitutes a “socially beneficial purpose” for L3C purposes. Crain’s quotes Collier on his interactions with putative L3Cs: “Some people are coming up to me saying, ‘Guess what? We’ve created ourselves as an L3C,’ but once they explain what they want to do, I tell them they are not an L3C.” But that isn’t what the legislation says. Within the lists of approved L3Cs in the various L3C-authorizing states are a number whose socially beneficial purposes are a little difficult to discern. Collier also notes that there are questions about standards of L3C transparency and accountability, undefined compared to the standards applicable to nonprofits. Crain’s also pointed out something that we at NPQ had noticed early on, that some L3Cs might create business ventures that compete with similar nonprofits, citing the similarity between the new Michigan IT L3C, Ardent Cause, and the longstanding Michigan nonprofit NPower. Although L3C promoters talk about their ability to attract different kinds of investment from various categories of investors, one L3C promoter made clear what L3Cs are really interested in: “If we’re going to be 100 percent honest, this advantage of foundations being able to invest in these efforts was the impetus for looking at L3Cs.” All of that information was quite unsurprising to us. What did surprise us was information that the Council on Foundations was still pursuing national legislation that would basically establish L3Cs as eligible for PRIs. We had been told that the Council had dropped its request for national legislation, for the moment, waiting instead to see how the IRS would actually deal with proposed PRIs for L3Cs. The implication is that federal legislation would deal with some of the questionable L3C social benefit purposes and undefined accountability and transparency issues.—Rick Cohen

Reduced Jewish philanthropy may hurt our welfare servicesOct 8, 2009;The Jerusalem Post | In another observation about trends in federated giving, declines in Jewish giving in the United States, attributed to Madoff’s impact on charities and the financial downturn, will impact social welfare agencies in Israel. Advance reports on research by Prof. Hillel Schmid and Avishag Rudich from the Hebrew University of Jerusalem’s Center for the Study of Philanthropy in Israel reveals that pledges to the US Jewish Federation system aresignificantly reduced in 2008 as compared to 2009. This year, the amount raised in the U.S. for Israeli social services through this system is $608 million to date as compared to $714 million by this time last year. The average size of gifts is also noted to have dropped.—Ruth McCambridge

True Yankee ingenuity launches MOOMilkOct 10, 2009;Bangor Daily News | In our continuing efforts to monitor social enterprises using the L3C (low profit limited liability corporation) model, we came across MOOMilk, an L3C in Maine. MOOMilk is the result of a cooperative agreement among 10 organic milk producers. Presumably, the socially beneficial purpose is MOOMilk’s ability to save locally owned organic milk producers that had been dumped by H.P. Hood and hadn’t been able to strike deals to move to other organic processors such as Horizon and Stonyfield. Why an L3C? The hint is here: “The company is in the process of raising $500,000 in equity and has commitments for about 35 percent of that.” We can imagine that private foundation investment would be very useful to these local milk producers.—Rick Cohen